Week's balance: Zelensky vows economic growth and launch of land market, water utility companies put forward their ultimatum, while gas tariffs are once again reduced
President Volodymyr Zelensky has promised to accelerate Ukraine’s economic growth and launch a full-fledged land market in 2020, Naftogaz announced another reduction in gas tariffs for the households, and water utility companies several weeks after the start of the electricity market reform demanded that electricity tariffs be reviewed, threatening to introduce hourly water supplies – these are the main economic developments of the outgoing week.
President of Ukraine Volodymyr Zelensky, developing the country's foreign policy relations, paid a two-day working visit to Turkey, where he met with his counterpart Recep Tayyip Erdogan and spoke at the Ukrainian-Turkish business forum.
The plans of the new government, voiced by the head of state, if implemented, will be able to significantly change the economy of Ukraine, which so far is losing to its neighbors in many respects.
The main news was the announcement of land reform set to be carried out this year. This will create a full-fledged land market in 2020. The thesis about the need for such a step has already been voiced by representatives of the President’s Office team, but after the Zelensky’s statements, for which the country has been waiting for two decades, they look almost inevitable.
"This year we will definitely implement land reform, which next year will create a land market of worth million hectares. This land is one of the best ones in the world in terms of quality," the president said.
In addition, in the next five years, the new Ukrainian authorities plan to carry out large-scale privatization, create competitive rules for working in energy markets, and simplify doing business. According to Zelensky, these and a number of other decisions should make Ukraine a "magnet for investment."
"In the next five years, Ukraine will change dramatically. Our economy will grow by five to seven percent," Zelensky said.
He also promised that at least $ 20 billion will be invested in domestic infrastructure in the next five years. The money will go to road repairs, airport and seaport industry development.
Water utility companies' ultimatum
\The outgoing week was marked not only by large-scale optimistic plans of Ukraine officials, but also by the resonant statement of the Ukrainian association of water suppliers "Ukrvodokanalekolohiya".
According to Olha Babiy, vice president of the Association, from August 20, the country's water suppliers may switch to hourly water supply due to the lack of funds to cover electricity bills. The problem arose after a month of operation of the new electricity market, launched on July 1, and the ensuing increase by a quarter of the price of electricity for industrial facilities.
Water suppliers were not ready for this, and therefore raised the alarm. They see a way out of the situation in increasing tariffs for their services, otherwise they threaten to switch to hourly water supply.
"We appeal to the prosecutor’s offices, the Security Service, the National Security and Defense Council, the Presidential Administration, and the Cabinet of Ministers to urgently intervene in the situation. Because we see that if the situation is not legally resolved before August 20, then we will have power outages for water utilities, and subsequently – man-made accidents in Ukrainian cities," Babiy emphasized.
An alternative to raising tariffs was voiced – to supply electricity to water utilities and heat producers at a fixed price.
Soon the government’s reaction to this appeal will be known...
Naftogaz continues to lower gas price for households
Another important piece of news of the outgoing week was the statement made by Naftogaz of Ukraine about the next stage of gas price reduction for the households. The company, applying the gas price calculation methodology, approved by the Cabinet of Ministers, reduced the August tariff by 5.1% against July. Now the cost of gas will be UAH 4,653.54 per 1,000 cubic meters. Thus, the gas price for Ukrainians has decreased by 25% since April. The company noted that the final cost of gas across Ukraine's regions depends on the distribution tariff set by the energy regulator, the NEURC, for regional or municipal gas companies. Gas suppliers are required to inform their consumers of the final price. In addition, this week, the hryvnia rate against the dollar, after a slight drop at the end of last week and on Monday, continued to strengthen.
The National Bank used the rise of the national currency to build up international reserves, which amounted to $21.84 billion as of early August. In total, in July and at the beginning of the last summer month, the NBU bought $1.3 billion, while since the beginning of the year, the regulator has purchased $2.9 billion in the interbank foreign exchange market.
The coming week is unlikely to be rich in economic news, which is the norm for mid-August. Prime Minister Volodymyr Groysman is due to return from a two-week vacation, which will allow him to hold a government meeting on Wednesday, at which, perhaps, the problem of water utilities will be solved and other important decisions made. In addition, the State Statistics Service will report on the country's foreign trade indicators for the first half of the year and the agricultural output index for the first seven months of 2019.